Peer to Peer Lending Guide – How does P2P business lending work?

Posted on:
22 May 2015

How does P2P business lending work?

P2P business lending is all about matching businesses that want to borrow money with individual lenders online via a P2P lending platform. Although the exact process varies between platforms, the usual order of events is for a business to apply to join their chosen platform online by filling in a form. Their paper work is then scrutinised by the platform. If their loan request is successful, it gets listed on that platform’s ‘marketplace’. Investors, who will have been through their own registration and verification process with that platform, will then offer money to fund the loans that they think will give them the best returns. The amount they offer varies, as does the number of investors that offer – it can be in the thousands.

On most platforms the investors choose what interest rate they would be happy to lend at. These are called auction P2P lending platforms and include Funding Circle and Thin Cats. A market platform is where the platform itself lends the money, and then resells segments of that loan to their investors. Wellesley & Co. is one such platform.

Once the loan target has been met the borrower can accept the loan and the funds are released (so long as all the paperwork is in place). Loans, along with any interest payments and fees owed to the platform, are usually paid back in equal monthly instalments.

View our full Peer to Peer Lending Guide or browse through the content below to learn more.

Business Guidance

Business Guidance

The information and tools contained in this guide are of a general informational nature and should not be relied upon as being suitable for any specific set of circumstances. We have used reasonable endeavours to ensure the accuracy and completeness of the contents but the information and tools do not constitute professional advice and must not be relied upon as such. To the extent permitted by law, we do not accept responsibility for any loss which may arise from reliance on the information or tools in our Insight Hub.

Premierline Business Insurance Broker is a trading name of Allianz Business Services Limited, registered in England and Wales under company number 4521167. Registered Office: 57 Ladymead, Guildford, Surrey, GU1 1DB. Allianz Business Services Limited is authorised and regulated by the Financial Conduct Authority and is covered by the Financial Ombudsman Service. Our FCA registration number is 304779.